The rand was firmer against major global currencies on Tuesday afternoon, at its best level in a week against the dollar, as market sentiment improved in the wake of an immigration agreement between the US and Mexico.

After being pummeled by poor GDP data and an ANC spat over the Reserve Bank last week, analysts said domestic political risks have also receded a little, and the rand could be in store for further gains.

At 2.45pm, the rand had gained 0.41% to R14.7663/$, 0.39% to R16.7062/€, and 0.3% to R18.7527/£. The benchmark R186 government bond had strengthened, with the yield falling five basis points to 8.355%. Bond yields move inversely to bond prices.

The rand is still about 33c, or 2.2%, weaker since its close on Monday June 3, the day before it emerged that SA’s economy contracted 3.2% in the first quarter. Later that same day, the rand came under pressure after ANC secretary-general Ace Magashule reiterated plans to alter the Reserve Bank’s mandate to include job creation.

Earlier on Tuesday, manufacturing data for April came in better than expected, growing 4.6% year on year, a positive sign of recovery in the first month of the second quarter.

Local political developments are also providing some support for the currency, with the ANC accepting the resignations of several MPs, including Bathabile Dlamini, who has been criticised for failing to ensure stability in the social grants distribution system.

This improved general sentiment a little, but the market was taking a more patient approach, and taking a more long-term view of government changes, said Mercato Financial Services analyst Nico du Plessis. Offshore factors remain the primary driver of the rand, he said.

Markets are focusing a little less on domestic political developments and instead on positive economic data, said Monex Europe foreign exchange market analyst Simon Harvey in a note, although he added this could change should load-shedding resume or further ANC quarrels transpire.

“Pessimism may have peaked,” said Harvey, adding that the market may have overpriced risk towards the currency, which could strengthen significantly should President Cyril Ramaphosa announce reforms perceived as market-friendly.

Global focus remains on the US-China trade war, with US President Donald Trump saying on Monday that new tariffs would be levied immediately on China, should President Xi Jinping not attend a G20 meeting later this month.

Sentiment was also being supported by the prospect of loose monetary policy out of the US, Stephen Innes, managing partner at Vanguard Markets, said in a note, adding that although the US-Mexico issue has been resolved, people are left wondering if tariffs will soon be used again to pursue other White House agendas.